NICA, An Alternative That Works For OBGYN

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NICA, An Alternative That Works For OBGYN

Kenney Shipley, Executive Director, NICA

The Florida Birth Related Neurological Injury Compensation Association (NICA) was created by the Florida Legislature in 1988. It was one of the recommendations that came from the 1986 Academic Task Force for Review of the Insurance and Tort Systems. A paramount concern of that Task Force was the growing unavailability of obstetric services to the women of Florida. Steeply increasing liability insurance premiums had caused many physicians to stop the practice of obstetrics, creating a shortage of professionals to provide care for expectant mothers. Sound familiar?

The major problem that was observed at that time was the large dollar amount of some liability awards. Although these awards were relatively few, for those cases where there was a severe disability, huge amounts were awarded with seemingly little regard for causality. NICA was recommended as a no-fault alternative to cover catastrophic birth related neurological injuries and patterned after a then new program in Virginia.

NICA was designed only to cover a very narrow range of catastrophic injuries. To be covered under the statute the injury must meet the following criteria:

Live Birth
2,500 grams single birth, 2000 grams multiplebirth
Permanently and substantially mentally and physically impaired
Caused by: Oxygen deprivation or mechanical injury
Occurring: In the course of labor, delivery or resuscitation in the immediate post delivery period

Awards made through the NICA Plan are exclusive. If an injury is covered by NICA, the child and his/her family are not entitled to compensation through lawsuits. The cost of lifetime care for birth-injured children is paid by NICA without assessment of fault. All claims are made by filing a petition with the Division of Administrative Hearings, and must be approved as payable by the Administrative Law Judge. If suit was filed before review by NICA and a determination by the Administrative Law Judge, a pleading can be filed with the court to abate the action until NICA and the Judge can complete a review for compensability. If the Judge determined the case to be compensable by NICA, the lawsuit will be dismissed.

The majority of deliveries are potentially covered under NICA. Assuming that the averages for most obstetric practices are 8% premature births, 10% elective c-sections, and 1% fetal demise, about 80% of all deliveries would be potentially covered by NICA. (American Journal of Obstetrics and Gynecology 1997; 177:268-271.)

In all of the claims that have been accepted, there was an abnormally high fetal heart rate. Often noted are decelerations or accelerations. There seems to be an unexpectedly high number of cases that are related to uterine rupture during labor in women with a previous c-section. Over 10% of covered cases have involved patients with a previous c-section. In most of these cases, the fetal distress and resulting hypoxia occurred before an emergency c-section could be performed. Meeting published standards of care failed to prevent these devastating neurological injuries.

There have been 161 claims accepted to date. If the average liability insurance award were only $3,000,000, this would translate to almost a half a billion dollars. With liability insurance verdicts for this kind of injury more in the $10 to $15 million dollar area, the impact over time has been substantial. 161 cases times $10 million equals one billion six hundred ten million dollars, with 30% to 50% going to trial attorneys. The majority of NICA dollars go to the injured child and family, not attorneys. Attorney fees represent 7% of claims paid to date, less than one percent of expected payments for the lifetime of the child. Understandably, trial attorneys make every effort to avoid NICA.

Even with the efficiency of the system, care for these children over their lifetime is expensive. Expected future payments for the care of these children must be calculated and "reserved" on NICA’s financial statements to ensure the actuarial soundness of the Plan. Changes in technology and the level of care these children receive leads to longer life expectancies. Reserves for expected payments must be calculated based on these increased life expectancies. NICA’s June 30, 2002 audited financial statements showed investments of approximately $321 million with claims liabilities against those investments of $299 million.

Many have asked, why are so many claims rejected? The answer is complex. Many claims are filed that are only filed to avoid delay in filing liability insurance claims as the case does not meet the "substantially mentally and physically impaired" requirement. Other cases would have been accepted but for the failure of the physician or hospital to give the statutorily required notice. If a case meets the statutory requirements, NICArecommends acceptance of the case. Because of the consistent level of the expert medical opinions, NICA’s recommendations are usually given deference by the Administrative Law Judge.

It must be understood that NICA’s judgment is based upon the medical opinion of a pediatric neurologist and a perinatologist, and NICAhas not been found to be wanting for lack of expertise. That does not assure that more claims will fall within the statutory guidelines.

We are now exploring the coordination of the care of NICA children through the other KidCare Programs. All of the children covered are medically complex, and should be included within the Children’s Medical Services Network (CMS). Many are Medicaid eligible, and NICA is designed to pay only those expenses that are not otherwise covered by other insurance, State or Federal programs. If we formally coordinate with the KidCare programs and obtain eligibility for these children under Title XXI of the Social Security Act, we will be able to draw down Federal funding which would allow us to expand coverage. This expansion might allow acceptance of a lower birth weight, or even expand to "substantially physically or mentally" impaired. Although we are at the early stages of the work formal vote of support for this effort from the Children’s Medical Services Network Advisory Council. It is a first step.

Although many insurance carriers gave substantial discounts to physicians who participated in NICAin the early years, those discounts have diminished as the problems in the insurance arena have again increased. This time the driver seems to be frequency of claims, not just unusually high claims, and it is affecting all physician practices, not just obstetricians. NICA continues to address the truly catastrophic birth related claims, but there are many others that remain part of the tort system. NICA provides part of the answer, and it is a system that has proven to return more of the dollars to the patient and family than to attorneys. We hope to be able to draw down the Federal funding that would allow an expansion of coverage to even more claims. As the debate on how to address the crisis in liability insurance continues, NICA is an example of an alternative that can work.